ALEXANDRIA, Va. (Legal Newsline) - A trend in American litigation that has been rising over the past several years is now under the spotlight thanks to a lawsuit brought by professional wrestler Terry “Hulk Hogan” Bollea against the media company Gawker.
Litigation financing, in which an outside party unrelated to a lawsuit provides the funds for a plaintiff to pursue it in exchange for a share of the financial recovery, has polarized opinions as it has started to grow in American courts.
Advocates say that litigation financing can even the playing field, allowing litigants to seek justice who otherwise would not have been able to afford a lawsuit. For example, litigation financing can allow a patent inventor to enforce his or her patents against much larger corporate entities, or an employee who has suffered discrimination or wage theft to seek damages when he or she otherwise wouldn’t have the resources to do so.
However, critics argue that litigation finance will only lead to more lawsuits and possibly more frivolous lawsuits and are also concerned about injecting commercial interests into the courtroom.
Now, with Silicon Valley billionaire Peter Thiel backing Bollea’s lawsuit against Gawker – filed after Gawker published a video of Bollea having sex with his friend’s wife – the practice of litigation financing is receiving new and wider attention.
“The Peter Thiel example is actually an unusual example,” Laurin Mills of LeClairRyan, who has written about the case, told the Legal Newsline. “That’s why everyone considers it a warning shot across the bow.”
Broadly speaking, this “warning shot” is that litigation financing provides a new tool for billionaires to further expand their influence, power and personal or commercial interests.
“Peter, this is twisted. Even were you to succeed in bankrupting Gawker Media, the writers you dislike, and me, just think what it will mean,” Gawker CEO Nick Denton wrote in an open letter on the site. “The world is already uncomfortable with the unaccountable power of the billionaire class, the accumulation of wealth in Silicon Valley and technology’s influence over the media.”
However, according to Mills, not everyone in the legal field believes that Thiel’s backing of the Bollea case is necessarily problematic.
“Half the legal community is just aghast that he’s doing that, and the other half is [thinking], ‘well, Gawker was way out on the edge of newsworthiness. That particular invasion of privacy was debatable," he said.
The question with this case is whether publishing Bollea’s sex tape constituted an undue or malicious invasion or privacy or whether it was newsworthy and of public interest, protecting it under the first amendment.
Gawker maintains that the video it published was newsworthy due to Bollea’s position as a public figure who had invited attention into his sex life.
However the Florida jury deciding the case did not agree. In March, Bollea was awarded $140 in damages. Gawker is slated to appeal the verdict but has since filed for bankruptcy.
“I think [this decision] will impact editors and lawyers when they’re thinking about approving a story – that it will make them think twice about approving a story on a public figure on intensely private facts,” Mills suggested. “Will it have a chilling effect on that? I think yes.”
Denton has also come out swinging against Thiel, calling his years-long search for cases against Gawker, as was reported by the New York Times, a “diabolical decade-long scheme for revenge” fit for a “comic-book villain” and challenging him to a public debate.
From a legal standpoint, however, Mills said that Thiel’s funding of Bollea probably does not make the wrestler’s stance more vulnerable.
“The fact that hulk Hogan was financed by a billionaire I don’t think is going to get [Gawker] home,” Mills said. “They’re better off pumping up their first amendment defense.”
As of Wednesday, both sides have agreed to a “standstill” on further litigation until next month.